CUSTOMERS IN VULNERABLE CIRCUMSTANCES 1 CUSTOMERS IN VULNERABLE CIRCUMSTANCES

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1 CUSTOMERS IN VULNERABLE CIRCUMSTANCES 1 CUSTOMERS IN VULNERABLE CIRCUMSTANCES

2 2 CUSTOMERS IN VULNERABLE CIRCUMSTANCES VULNERABILITY IS NOW, MORE THAN EVER, A TOPICAL ISSUE AND AREA OF INTENSE FOCUS ACROSS ALL REGULATED INDUSTRIES. REGULATORS ARE PUSHING TO ENSURE THAT COMPANIES ADDRESS VULNERABILITY AS A CORE CONSIDERATION, AND ARE NOW ACTIVELY DISCUSSING THE APPROACHES TAKEN AS PART OF THEIR NORMAL SUPERVISORY ACTIVITY. Based on insight gained into customers in vulnerable circumstances through our engagement within the industry, many firms are struggling with corporate definitions, policies, considering the most appropriate operating model(s), and understanding how capable front and back office staff are at identifying and dealing with vulnerability. A clear vulnerability strategy is fundamental. Having an effective and appropriate approach to identifying, recognising and managing vulnerability is vital in delivering good customer outcomes and meeting regulatory obligations. However, this will be highly dependent on the individual strategies and cultures within firms.

3 CUSTOMERS IN VULNERABLE CIRCUMSTANCES 3 ALEX PRENTICE SENIOR CLIENT PARTNER

4 4 CUSTOMERS IN VULNERABLE CIRCUMSTANCES CUSTOMER OUTCOMES BASED ON IN-DEPTH RESEARCH, HUNTSWOOD HAS PRODUCED THE FOLLOWING 10 MEASURABLE OUTCOMES TO DEMONSTRATE THE FAIR TREATMENT OF CUSTOMERS IN VULNERABLE CIRCUMSTANCES. 1) PRODUCT Products are clear and easy to understand, containing no surprises that only become apparent when a crisis strikes 2) COMMUNICATION There is a choice of ways for customers to communicate 3) TAILORED APPROACH Customers are treated as individuals, with tailored responses according to their circumstances 4) JUDGEMENT Staff have the authority and discretion to offer flexible solutions and outcomes where appropriate

5 CUSTOMERS IN VULNERABLE CIRCUMSTANCES 5 5) FAIR DISCLOSURE AND INFORMATION USAGE Customers are encouraged to be open and honest, safe in the knowledge that the information they give will only be used in their best interests 6) TELL ONCE Information regarding customers circumstances is recorded properly to prevent them having to repeat themselves 7) PROACTIVE FORBEARANCE Proactive contact is made with customers in the event of suspected financial difficulties 8) VIGILANCE Signs of suspicious activity that may indicate abuse or fraud on a customer s account are vigilantly monitored 9) CARERS Carers for vulnerable customers are treated with respect and their concerns noted while data security is maintained 10) THIRD PARTIES There is consistent and fair treatment of the recently bereaved, or those acting with Power of Attorney or a third party mandate

6 6 CUSTOMERS IN VULNERABLE CIRCUMSTANCES DO YOU KNOW HOW WELL YOUR FIRM TREATS CUSTOMERS IN VULNERABLE CIRCUMSTANCES - AND HOW THIS COMPARES TO YOUR PEERS? Complete Huntswood s self-assessment tool to: Understand the outcomes your firm s current approach is delivering Gain insight on how your firm s approach compares to peers

7 CUSTOMERS IN VULNERABLE CIRCUMSTANCES 7 SAMPLE OUTPUTS YOUR FIRM S INDIVIDUAL RESULTS HOW YOUR FIRM COMPARES AGAINST THE INDUSTRY BENCHMARK huntswood.com/self-assessment If you would welcome the opportunity to discuss your firm s individual results, please select the relevant option when completing the tool.

8 8 CUSTOMERS IN VULNERABLE CIRCUMSTANCES OUR APPROACH WE OFFER SUPPORT IN A RANGE OF AREAS TO HELP ENSURE YOUR FIRM IS TREATING VULNERABLE CUSTOMERS FAIRLY. THE FOLLOWING CAN BE UNDERTAKEN AS A COMPLETE PROGRAMME OR WITH A FOCUS ON CERTAIN ELEMENTS DEPENDING ON YOUR FIRM S REQUIREMENTS. STAGE 1 CURRENT STATE APPROACH AND ANALYSIS We assess your firm s current approach to supporting customers in vulnerable circumstances and ensure that it supports fair customer outcomes. Huntswood s analysis includes an assessment against our 10 vulnerability outcomes. Outcomes testing goes beyond traditional quality control methods which typically only test processes. This often fails to test the fairness of customer outcomes. By testing the focus on customer outcomes, this will help the business to understand what good looks like in practical terms for customers and help to inform any required changes to operational design. STAGE 2 OPERATIONAL DESIGN Having identified risks and controls, your firm needs to ensure that there is effective governance in place. Where a risk has been identified, Huntswood will work with you to action any required transformation work. This may include re-mapping end-to-end business processes, customer service guides, customer agent training, and working with internal compliance and quality assurance teams to develop revised frameworks to ensure fair customer outcomes are delivered in all circumstances.

9 CUSTOMERS IN VULNERABLE CIRCUMSTANCES 9 STAGE 3 EXECUTION AND EMBEDDING Following the design plan, Huntswood will support you in executing any transformation work required. This may range from programme leadership to critical friend support to the Programme Director and attendance at governance forums. Delivering a transformation programme is the simple part; making the change stick is much harder. We work with firms to drive and embed any proposed changes, for example this can include a tailored learning package, which we can also deliver if required, to ensure changes are truly understood and land well within your firm. The outcome of this stage sustains effective change in the business, achieving the right customer outcomes in a compliant manner.

10 10 CUSTOMERS IN VULNERABLE CIRCUMSTANCES HUNTSWOOD S SERVICES ACROSS THE THREE STAGES WE WILL DEPLOY SOME OR ALL OF THE FOLLOWING SERVICES TO PROVIDE A COMPLETELY BESPOKE SOLUTION. PRODUCT GOVERNANCE AND REVIEW Bespoke design and implementation of product governance frameworks. We also provide ongoing oversight to ensure that individuals are not unduly excluded as part of the product design process and that the ongoing review and design takes account of customers in vulnerable circumstances. OUTCOMES TESTING We follow the endto-end customer journey delivering a comprehensive review to implementation approach or concentrate on any component part. Our approach tests the concept of customer fairness and understanding, provides management information that tracks customer outcomes and provides early diagnosis of any problems related to customers in vulnerable circumstances. TRAINING AND COMPETENCY REVIEW We review your existing approach through the lenses of enhancing both employee competence and operational efficiency with any required changes feeding directly into business success and your approach to dealing with customers in vulnerable circumstances.

11 CUSTOMERS IN VULNERABLE CIRCUMSTANCES 11 TRAINING COMPLIANCE MONITORING AND INDEPENDENT ASSURANCE CULTURE ASSESSMENT AND TRANSFORMATION COMPLAINTS AND COLLECTIONS ESCALATION TEAMS We are able to provide specified training and competency pathways as well as supporting firms with tailored training for customer-facing staff, management, specialist teams, back office staff and relevant suppliers. This is required to ensure an understanding of the steps and actions needed in relation to the identification and support of customers in vulnerable circumstances. We are able to develop a complete compliance monitoring framework, validate a firm s existing arrangements, deliver thematic reviews and one-off tailored assessments on how your firm is currently treating customers in vulnerable circumstances. We assess the current culture within your firm and ensure that any interventions we suggest are focused on customer outcomes, and this includes an overview of your approach to dealing with customers in vulnerable circumstances. We are able to offer dedicated resource as part of any ring-fenced team in relation to complaints and collections. This can be as part of an insourced, co-sourced or outsourced arrangement to support firms. This should enable decisions to be made that act outside of usual practices or procedures, if it is right for a customer and without compromising the fair treatment of all customers.

12 12 CUSTOMERS IN VULNERABLE CIRCUMSTANCES OUR SUCCESS STORIES

13 CUSTOMERS IN VULNERABLE CIRCUMSTANCES 13 EMBEDDING A ROBUST VULNERABILITY FRAMEWORK CHALLENGE ACTION RESULT Our client had been unsuccessful in embedding their own framework - facing challenges in defining vulnerability, identifying vulnerable customers through different access channels and training front-line staff accordingly. We were required to review and design their vulnerable customer framework and to support its implementation. We began by undertaking deskbased reviews of their relevant policies and processes, then conducted interviews with key stakeholders to understand our client s current approach to vulnerable customers. We then completed a gap analysis, highlighting significant areas that required improvement. We re-designed the firm s vulnerable customer policy, identified and defined different customer vulnerabilities and developed our client s existing training material. Our intervention resulted in a robust vulnerable customer framework, more knowledgeable and empowered staff, and an enhanced customer experience.

14 14 CUSTOMERS IN VULNERABLE CIRCUMSTANCES DEVELOPING AND ROLLING-OUT A NEW VULNERABILITY POLICY CHALLENGE ACTION RESULT Our client was subject to regulatory enforcement action and, as a result, required to undertake a wholesale review of their vulnerability policy and training. As our client s in-house training approach had failed to deliver the right change in knowledge and behaviour - and therefore the right customer outcomes - we were engaged to complete a thorough Training Needs Analysis to identify areas of need and propose possible solutions. We undertook initial analysis identifying key areas of immediate risk, evidence of specific training gaps, and insight into cultural and structural contributing factors. We developed a combination of training solutions focused on consolidating essential knowledge, skills and capability pertinent to specific role types. Face-toface training and role plays were designed and rolled-out to ensure front-line staff and specialist teams had an increased understanding of vulnerability. Overall, we delivered one and twoday training programmes to our client s entire existing workforce (c1,800 staff). In addition, we re-designed existing induction training materials to ensure our client would be aligned to regulatory expectations with regard to the fair treatment of vulnerable customers going forward.

15 CUSTOMERS IN VULNERABLE CIRCUMSTANCES 15 ENHANCING BEREAVEMENT PROCESSES CHALLENGE ACTION RESULT Our client had been considering its overall approach to vulnerability since the publication of the FCA s Occasional Paper 8. We were asked to conduct an initial gap analysis to identify areas of high risk within the firm s current vulnerability approach, and to implement both tactical and strategic interventions to meet regulatory expectations. Our initial analysis highlighted a series of high risk areas requiring change one area being the firm s bereavement processes. After conducting a review of the current arrangements, we implemented a Tell Us Once strategy across the firm, aligning to the BBA taskforce principles for vulnerability. We also embedded a solution enabling employees to be informed of deaths electronically and provided staff with the necessary training. By supporting our client with their bereavement processes, the firm was able to enhance the customer experience, improving outcomes for customers in vulnerable situations and placing the firm in a better position to meet regulatory expectations.

16 16 CUSTOMERS IN VULNERABLE CIRCUMSTANCES BESPOKE VULNERABILITY TRAINING CHALLENGE ACTION RESULT Our client had designed a robust and sustainable operating model to support their approach to managing customer vulnerability. The firm requested support in educating and up-skilling all relevant staff to ensure individuals had the necessary knowledge, skills and behaviours to enable our client to treat customers fairly and meet customer and regulatory expectations. We initiated a vulnerable customers Training Needs Analysis, to assess the current level of knowledge, skills, ability and behaviours of all the firm s staff against the regulator s defined series of customer outcomes. Following this, we designed and rolled-out a training workshop tailored to the firm s target markets and customers, deployed in phases across all relevant teams. The workshop focused on understanding the importance of vulnerability, defining and identifying customers in vulnerable situations, managing customer disclosure, and understanding the firm s suicidal and self-harm policy. By increasing awareness of customer vulnerability, debt recovery rates were improved and the firm s reputation as a responsible leader was enhanced. The workshop itself received very positive feedback including: Informative and helpful. This training could help me save lives! What amazing training. Thank you so much for an amazing 2 days. My knowledge and confidence is now 100% on vulnerable customers. The training put things into real life perspectives and was able to not only train me but give me guidance on how to coach within my new role.

17 CUSTOMERS IN VULNERABLE CIRCUMSTANCES 17 STUART O SULLIVAN PRINCIPAL CONSULTANT

18 18 CUSTOMERS IN VULNERABLE CIRCUMSTANCES BENEFITS GREATER CUSTOMER ADVOCACY AND LOYALTY Making the fair treatment of vulnerable customers core to a business by equipping front-line staff with the knowledge and skills to deal with sensitive issues, will provide positive customer experiences and in turn will create greater customer loyalty, strengthen the firm s reputation and prevent customers from switching.

19 CUSTOMERS IN VULNERABLE CIRCUMSTANCES 19 REGULATORY COMPLIANCE REDUCED OPERATIONAL LOSS EMPOWERED WORKFORCE By undertaking an initial risk based gap analysis, areas of non-compliance or risks which fall outside of the business risk thresholds can be clearly identified giving a comprehensive assessment of the as is to your audit and risk committee. In addition, you will be able to provide the regulator with clear evidence that effective oversight and governance arrangements are in place to support the delivery of good outcomes to vulnerable customers. Cost savings can be achieved by reviewing a business s current operating model and applying lean management principles. Further, by acting with care towards customers in vulnerable circumstances, there is likely to be an increase in first call resolution and a corresponding decrease in repeat contact. Providing all staff with an understanding of, and tailored training for, engaging with vulnerable customers will encourage confident interaction and an ability to effectively deal with customer scenarios. Staff will feel empowered and can make a real difference to the customer experience.

20 20 CUSTOMERS IN VULNERABLE CIRCUMSTANCES NICHOLAS ROSS DIRECTOR OF REGULATORY CONSULTING

21 CUSTOMERS IN VULNERABLE CIRCUMSTANCES 21 WHY HUNTSWOOD DEEP EXPERIENCE AND A PROVEN RECORD OF DELIVERY We have extensive experience in delivering a range of complex advisory projects on the fair treatment of vulnerable customers. Over the years, we have worked across a number of regulated sectors - including retail banks, credit providers, car finance providers and pension firms helping clients develop robust approaches to address the vulnerability challenges they are facing. SUBJECT MATTER EXPERTISE AND INSIGHT We have a significant depth of knowledge in relation to vulnerability, maintained through close working relationships with a wide range of key industry stakeholders including charities (e.g. StepChange), researchers and academics from the University of Bristol, trade bodies and regulators (across FCA, Ofgem and Ofwat) to ensure we re able to provide firms with market-leading support in this area. TAILORED AND ACTIONABLE RECOMMENDATIONS We will not simply provide a status report, but develop clear and achievable recommendations - with a detailed roadmap to ensure effective implementation.

22 22 CUSTOMERS IN VULNERABLE CIRCUMSTANCES Huntswood CTC Ltd Abbey Gardens, Abbey Street, Reading, Berkshire RG1 3BA Search Huntswood